How RECs can support business reporting

What are Scope 2 Emissions?

Introduction

Industrial facility with large chimneys and cooling towers emitting steam under a clear blue sky.

Electricity is an operating cost and part of a company’s greenhouse gas inventory. For Singapore offices, retail spaces, warehouses, and data centres, purchased electricity may account for a meaningful share of operational emissions.

That is where Scope 2 emissions come in. They cover indirect emissions linked to purchased electricity, steam, heat, or cooling. Understanding this category helps businesses report energy-related emissions clearly and choose suitable actions. In this article, we explain how Scope 2 accounting works and where Renewable Energy Certificates, or RECs, fit in.

Key takeaways

Scope 2 covers indirect emissions from purchased electricity and other acquired energy a business uses.
Under the GHG Protocol, companies in markets like Singapore report electricity-related emissions using both location-based and market-based methods, which answer different questions about energy use.
RECs can support lower market-based emissions reporting when they meet the relevant reporting rules and are properly matched, verified, and redeemed.

What does Scope 2 cover?

Scope 2 emissions sit between direct operational emissions and the wider emissions across a company’s value chain. Scope 1 covers sources a business owns or controls, such as company vehicles or on-site equipment, while Scope 3 covers other indirect emissions such as purchased goods, transport, business travel, and use of sold products.

Scope 2 focuses on purchased energy. Electricity used for air-conditioning, lighting, lifts, computers, or servers creates emissions at the power station, while the consuming business accounts for those emissions in this category. In Singapore, most of those power stations run on natural gas, which generated about 94% of the country’s electricity in 2024.

Businesses can measure indirect emissions from purchased electricity, steam, heat, and cooling using a common Scope 2 accounting framework published by the Greenhouse Gas (GHG) Protocol. This helps businesses track and disclose the energy-related footprint linked to their operations.

Why this matters for businesses in Singapore?

For many service-based companies, commercial buildings, and data-heavy operations, electricity use is straightforward to track through bills, meter data, and energy records. This gives sustainability teams a clearer baseline for setting targets and comparing annual performance.

For listed companies, it is now a requirement. All SGX-listed companies must report Scope 1 and 2 emissions from FY2025, and Straits Times Index (STI) companies must add Scope 3 from FY2026, which can mean more data requests for their suppliers.

It can also matter commercially. Customers, parent companies, investors, lenders, and procurement teams may request emissions information during ESG reviews, supply-chain assessments, tenders, or financing discussions. Clearer energy data can also support sustainability disclosures and green building initiatives.

Electricity use also connects with actions a business can control. Reducing waste, improving efficiency, changing procurement arrangements, and considering business energy solutions can all form part of a broader plan.

How location-based and market-based accounting differ?

A company can look at electricity emissions in two different ways. They are related, but they are not interchangeable.

Location-based method 📍

Location-based emissions accounting uses the average emissions intensity of the electricity grid where consumption takes place. In Singapore, this means multiplying the electricity used by the grid emission factor published by the Energy Market Authority (EMA), which was 0.402 kg of CO2 per kWh for 2024. An office using 100,000 kWh a year would report about 40.2 tonnes of CO2.

This method reflects the physical grid mix. Buying a REC does not change the electricity flowing through your building, so it does not change the location-based result.

Market-based method 📈

Market-based emissions accounting looks at the electricity attributes a company has chosen through eligible contracts or instruments. These may include certain supplier products, power purchase agreements, or RECs.

Under the GHG Protocol framework, eligible contractual instruments must meet defined quality criteria. When the certificates and consumption are properly matched, the market-based method can recognise the renewable attributes associated with that purchase.

Does a business need to report using both methods? 🤔

Scope 2 emissions can therefore differ under the two methods. A company may report average grid impact under the location-based method while reflecting qualifying procurement choices under the market-based method. If the office above matched all 100 MWh with 100 qualifying RECs, its location-based figure would stay at about 40.2 tonnes, while its market-based figure could fall to zero. As RECs are available in Singapore, the GHG Protocol requires companies here to report both figures.

How RECs can support market-based reporting?

A REC represents the renewable attributes associated with one megawatt-hour of electricity generated from an eligible renewable source. These renewable energy credits can be traded separately from the physical electricity, then redeemed or retired so the same attribute cannot be claimed again. Despite the name, RECs are not carbon credits, which represent a tonne of CO2e reduced or removed rather than renewable electricity.

RECs can be useful when on-site generation is impractical because of roof space, tenancy arrangements, capital constraints, or building ownership. For businesses considering solar RECs, this provides a way to match electricity consumption with verified renewable generation without modifying the premises. In Singapore, local RECs typically come from solar, the country’s main local renewable source. Where roof space allows, Flo’s solar solutions offer on-site generation with zero upfront capital.

They can also support lower reported Scope 2 emissions under the market-based method when applicable requirements are met. When using RECs for renewable energy reporting, results depend on factors such as market boundary, generation source, vintage, matching rules, and the reporting standard. A REC is therefore a reporting and procurement instrument, not proof that renewable electricity physically travelled to your premises.

Market boundary matters in Singapore. SS 673, the national code of practice for RECs, accepts certificates from elsewhere in Southeast Asia when local supply is not possible, but RE100 currently expects Singapore-generated RECs for Singapore consumption, so for businesses looking to report — do take note!

Choosing the right REC approach

Start by identifying why your business is procuring RECs. Requirements can differ by geography, vintage, documentation, and accepted certificate types, so the reporting or certification framework should guide the purchase. When comparing a REC company in Singapore or choosing a green energy certificate, check that the available attributes fit those requirements, and that the certificates are issued, tracked and redeemed in line with SS 673.

Every Flo electricity plan already matches 100% of usage with regional RECs that adhere to SS 673, redeemed on the customer’s behalf at no extra cost. For businesses needing local Singapore RECs, such as for RE100, Flo also offers one-time and recurring REC procurement, recommending certificates by origin, technology and vintage to suit frameworks such as RE100, CDP, GRI and SBTi. This can simplify administration while keeping procurement aligned with reporting needs.

For ongoing programmes, recurring procurement can help match certificates to regular consumption over time. With Flo, these can be bought annually or added to your monthly electricity bill. For retrospective reporting, a one-off purchase may be more suitable. In either case, keeping clear documentation helps your organisation support its renewable energy claims and show how the certificates were applied.

The GHG Protocol is also revising its Scope 2 Guidance, with proposals to tighten when and where certificates must be generated. The final standard is expected in 2027, so certificates with clear origin and vintage records, ideally from your own market, will help keep claims robust.

Conclusion

Scope 2 emissions help businesses understand the greenhouse gas impact associated with purchased energy. Reporting may use location-based and market-based methods, while qualifying RECs can support market-based claims. Overall, RECs are most useful when they complement energy efficiency and are carefully selected and documented. They should form part of a broader emissions strategy, not replace efforts to reduce electricity use. Together, these measures support a more credible approach to managing electricity-related emissions.

About Flo Energy

Flo Energy is a licensed electricity retailer supporting Singapore businesses with electricity plans matched 100% to RECs, solar solutions, and one-time or recurring REC procurement. We help businesses select certificates based on origin, technology, vintage, and reporting needs, and manage verification and redemption so records remain organised across reporting periods. Contact us to discuss a REC approach that fits your reporting requirements.